136 Countries Agree to 15% Minimum Corporate Tax Rate

Oct, 2021

Introduction

Do you have any understanding of what corporate tax is? If so, explain.

Do you have any knowledge of what tax avoidance is? If so, explain.

Vocabulary list 

• Students read each word followed by the definition, focusing on the correct pronunciation.

• The teacher reads the sample sentence and the students repeat, focusing on the correct pronunciation.

• After reading the list, students try to make their own example sentences using the words that are new to them. 

• Students share their example sentences and the teacher gives feedback, correcting errors if necessary.

implement (verb)

ˈɪm.plɪ.ment

to start using as a plan, system or tool

Our company plans to implement the new working hours next year.

 

multinational (noun)

ˌmʌl.tiˈnæʃ.nəl

a company that operates in many countries

There are many multinationals in London with employees from all over the world.

 

reroute (verb)

ˌriːˈruːt

to change the direction of something

Environmental activists are campaigning to have the Dakota pipeline rerouted. 

 

boost (verb)

buːst

to increase or improve something

If the company doesn’t find a strategy to boost sales soon, we will be facing severe financial difficulties next year.

 

accord (noun)

əˈkɔːrd

an official agreement

The Paris Climate Accords is an international agreement aimed at addressing climate change.

 

reap (verb)

riːp

to obtain or receive something good as a result of your own or other’s actions

When you have your own business, you reap all the rewards of your hard work.

 

outbid (verb)

aʊtˈbɪd

to offer a higher or better price for something

We almost got the contract, but were outbid by another company.

136 Countries Agree to 15% Minimum Corporate Tax Rate

More than 130 countries have agreed to implement a minimum corporate tax rate of 15% to deter multinationals from rerouting their profits through low-tax countries. The deal will also establish new rules for the digital era, forcing companies like Google and Amazon to pay taxes in countries where their goods and services are sold, even if they have no physical presence there.

US President Joe Biden has been one of the driving forces behind the agreement as governments worldwide try to boost revenue following the COVID-19 pandemic. French Finance Minister, Bruno Le Maire, said of the new agreement – “This accord opens the way to a true tax revolution for the 21st century”, adding that finally “the digital giants will pay their just share in taxes”.

The agreement among 136 countries, representing 90% of the global economy, was announced by the Paris-based Organization for Economic Cooperation and Development (OECD), which hosted the talks that led to it. The minimum rate would apply to companies with more than $864 million in annual revenue, and would reap some $150 billion for governments, according to the OECD.

“Today’s agreement represents a once-in-a-generation accomplishment for economic diplomacy” said US Treasury Secretary Janet Yellen in a statement. She added that it would end a “race to the bottom” in which countries outbid each other with lower tax rates. However, there are some countries who are not so keen on the agreement.

In the last few decades, Ireland’s economic growth and prosperity has benefitted from being able to offer low corporate tax rates to large corporations and it was one of the last countries to announce it would join. The country’s low-tax policy has led to tech giants like Google, Apple and Facebook to base their European headquarters there. This move has created jobs and helped to boost the country’s economy. Several other developing countries have also raised objections, including Nigeria, Kenya, Pakistan, and Sri Lanka who have all indicated that they will not sign up to the new accord.

Anti-poverty and tax fairness advocates said the bulk of new revenue would go to wealthier nations and offer less to developing countries that are more dependent on corporate taxes. The deal will now be taken up by G-20 finance ministers, and then by G-20 leaders for final approval at a summit in Rome at the end of October 2021.

Based on an article by The Associated Press. All rights reserved.

QUESTIONS

 

1. Tech companies like Google and Amazon currently pay no taxes outside of the countries they are based.

TRUE / FALSE / INFORMATION NOT GIVEN

 

2. The new accord targets all multinational companies around the world.

TRUE / FALSE / INFORMATION NOT GIVEN

 

3. Why was Ireland reluctant to sign up to the new agreement?

 

4. Which other countries have objected to the new agreement?

 

5. Anti-poverty and tax fairness advocates strongly support the new agreement.

TRUE / FALSE / INFORMATION NOT GIVEN

Discussion

  • What are your thoughts on the proposed minimum corporate tax rate?
  • Were you aware that hugely profitable multinationals like Amazon do not pay tax in many of the countries where they do business? If not, what do you think about this?
  • Why do you think developing countries don’t support this accord?
  • Do you or anyone you know work for a multinational?
  • What are the largest companies in your country?
  • What industries would you say are most important to your country’s economy?
  • How high are personal income tax rates where you live?
  • Are you aware of any changes to tax laws in your country in recent years?
  • What do you think your government should prioritise when it comes to spending?
  • What industries or businesses would you invest in if you were a billionaire?